Ellison's exemplar SAP-to-Oracle region rules out ditching Oracle

Largest local authority in Europe expects to go live with re-implementation

Birmingham City Council – Europe's largest local authority, serving over one million customers – has agreed to re-implement an Oracle Fusion system following a failed rollout that saw costs escalate by more than £100 million ($125.6 million) and the authority unable to fulfill its statutory duties.

In 2021, Oracle founder and CTO Larry Ellison called out Birmingham City Council as one of a number of successful wins to migrate very large SAP ERP customers to Oracle Fusion.

The council is struggling to get its heavily customized current implementation, which went live in April 2022, "safe and compliant" such that it can understand its financial position and file auditable accounts.

In June last year, a report to the cabinet said it would also develop an updated delivery plan including "systems integration work that will require reverting to a more 'out of the box' Oracle solution."

However, earlier this year, the council's audit committee heard it was still deciding whether to re-implement Oracle or look for another solution.

Philip Macpherson, Oracle program lead for the council, said the team would conduct "analysis to genuinely weigh up the pros and cons around that to sort of underpin the case for re-implementation [of Oracle]."

In a report to the cabinet today, the council said that work was complete, without considering other suppliers in the market.

"An extensive business requirements collation and evaluation exercise took place as part of the original procurement which confirmed that Oracle was a good fit for the Council. This has been re-confirmed recently by the completion of the Cloud Fit Assessment which also verified that the Council's requirements could be met through out of the box Oracle processes. There is therefore no reason for the council to repeat this expensive and time-consuming market exercise or to reconsider its outcome," the report said.

As well as working to get its current customized implementation fit for purpose, the council is set to launch a procurement for a new Oracle delivery partner to "scale, deploy and work with the Council to implement the initial solution by March 2026 and run the service for a further 3-5 years."

The new delivery partner – whoever it is – will not be the only third party benefiting from the debacle. Oracle Consulting, Gartner, PwC, and KPMG have also worked on the project, as well as original partners Insight Direct (ULK) and Evosys.

The paper said it would be offered to the market through an "established public sector framework" and requests funding of £12.7 million ($15.9 million) for the first phase of re-implementation.

But the total cost of re-implementing Oracle is uncertain. In its outline business case in 2018, the council put the number at around £15 million ($18.8 million). That increased to nearly £20 million ($25 million) by the full business case in 2019.

A report in February said the council approved an additional £45 million ($56.5 million) for the 2024/25 and 2025/26 financial years, "in addition to the £86 million [$108 million] budget approved so far."

Now the council cabinet thinks it might not need all the money. "Work is ongoing to confirm the 'end to end' cost to date and projected end cost of the solution, considering the initial implementation, manual workarounds, interim fixes and re-implementation. This includes confirming the level of remaining funding from the £86 million previously approved by Cabinet, which will be utilised prior to accessing the additional funding," the report said.

However, the project's scope is set to be reduced. The previous HR and finance system – an SAP-based system first implemented in 1999 – supported finance, HR, and payroll for schools.

"Whilst the council remains very strongly committed to ensuring schools receive the best possible services to support their activities, it has concluded that it should not make provision to continue the current, Oracle-based, arrangements in the re-implementation of the Oracle system," the latest Cabinet report said.

It said "the Oracle system is not suited to providing these services to schools in the long run" because, even after re-implementation, an "Oracle-based solution for schools would be comparatively expensive and inefficient." The council said it would "identify the best options for schools to replace council traded services based on Oracle Finance and HR."

The increase in ERP project costs, together with the failure of the accounting system, contributed to the council declaring itself effectively bankrupt last year. A bill of up to £760 million ($954 million) to settle equal pay claims also contributed to the effective bankruptcy. That figure is now being disputed. ®

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